The
accompanying unaudited condensed consolidated financial statements have been
prepared on a basis consistent with the accounting principles and policies
reflected in the Company's annual report for the year ended August 31, 2005.
In
the opinion of Management, the accompanying unaudited condensed consolidated
financial statements contain all adjustments (consisting only of normal
recurring accruals) necessary for a fair presentation of its consolidated
financial position at November 30, 2005 and the consolidated results of
operations for the three month periods ended November 30, 2005 and 2004, and
the
consolidated cash flows for the three month periods ended November 30, 2005
and
2004.

The
basic
business of the Company is agriculture, which is of a seasonal nature and
subject to the influence of natural phenomena and wide price fluctuations.
Fluctuation in the market prices for citrus fruit has caused the Company to
recognize additional revenue from the prior year's crop totaling $418 thousand
in 2005 and $31 thousand in 2004.

The
results of operations for the stated periods are not necessarily indicative
of
results to be expected for the full year. Certain items from 2004 have been
reclassified to conform to the 2005 presentation.

2.
Real Estate:

Real
estate sales are recorded under the accrual method of accounting. Under this
method, a sale is not recognized until certain criteria are met including
whether the profit is determinable, collectibility of the sales price is
reasonably assured and the earnings process is complete.

In
October 2005, the Company through Alico-Agri, purchased 291 acres of lake-front
property in Polk County, Florida, for $9.2 million.

In
November 2005, the Company sold approximately 280 acres of citrus grove land
located south of Labelle, Florida in Hendry County for $5.6 million cash in
escrow. The Company will retain operating rights to the grove until residential
development begins. The Company is exploring the possibility of a like-kind
exchange regarding this transaction. The Company recognized a net profit on
the
sale of $4.4 million.

3.
Marketable Securities Available for Sale:

The
Company has classified 100% of investments in marketable securities as available
for sale and, as such, the securities are carried at estimated fair value.
Unrealized gains and losses determined to be temporary are recorded as other
comprehensive income, net of related deferred taxes, until realized. Unrealized
losses determined to be other than temporary are recognized in the period the
determination is made.

The
cost and estimated fair values of marketable securities available
for sale
at November 30, 2005 and August 31, 2005 were
as follows:

November
30, 2005

August
31, 2005

(Unaudited)

Gross

Estimated

Gross

Estimated

Unrealized

Fair

Unrealized

Fair

Equity
securities:

Cost

Gains

Losses

Value

Cost

Gains

Losses

Value

Preferred
stocks

$

-

$

-

$

-

$

-

$

1,363

$

81

$

(17

)

$

1,427

Common
stocks

1,575

-

-

1,575

6,483

1,066

(218

)

7,331

Mutual
funds

-

-

-

-

17,029

2,846

(86

)

19,789

Total
equity securities

1,575

-

-

1,575

24,875

3,993

(321

)

28,547

Debt
securities

Municipal
bonds

$

15,550

$

22

$

(9

)

$

15,563

$

20,548

$

74

$

-

$

20,622

Mutual
funds

-

-

-

-

4,344

155

(76

)

4,423

Fixed
maturity funds

420

-

-

420

2,799

-

(41

)

2,758

Corporate
bonds

17,723

-

(355

)

17,368

14,897

12

(435

)

14,474

Total
debt securities

33,693

22

(364

)

33,351

42,588

241

(552

)

42,277

Marketable
securities

available
for sale

$

35,268

$

22

$

(364

)

$

34,926

$

67,463

$

4,234

$

(873

)

$

70,824

The
aggregate fair value of investments in debt securities as of November 30, 2005
by contractual maturity date, consisted of the following:

Aggregate

Fair
Value

Due
in
one year or
less $
27,481

Due
between one and two
years
5,870

Total $
33,351

_____

The
following table shows the gross unrealized losses and fair value of the
Company’s investments with unrealized losses that are not deemed to be other
than temporarily impaired, aggregated by investment category and length of
time
that individual securities have been in a continuous unrealized loss position,
at November 30, 2005.

Less
than 12 months

12
months or greater

Total

Fair

Unrealized

Fair

Unrealized

Fair

Unrealized

Value

Losses

Value

Losses

Value

Losses

Preferred
stocks

$
-

$
-

$
-

$
-

$
-

$
-

Common
stocks

-

-

-

-

-

-

Equity
mutual funds

-

-

-

-

-

-

Municipal
bonds

4,713

9

-

-

4,713

9

Debt
mutual funds

-

-

-

-

-

-

Fixed
maturity funds

-

-

-

-

-

-

Corporate
bonds

13,667

268

3,701

87

17,368

355

Total

$

18,380

$

277

$

3,701

$

87

$

22,081

$

364

Net
realized gains on the sale of securities for the three months ended November
30,
2005 and 2004 were $3.3 million and $0.5 million, respectively.

Equity
securities and funds.

During
the quarter management decided to sell its equity investments prior to December
31, 2005 and to reinvest in liquid debt securities. An adjustment of $29
thousand was made during the quarter to reduce the cost of the remaining equity
securities determined to be other than temporarily impaired to market value
at
November 30, 2005 and charged to interest and investment income.

Debt
instruments and funds. The
unrealized losses on municipal bonds and corporate bonds were primarily due
to
changes in interest rates. At November 30, 2005 the Company held loss positions
in 4 municipal bonds and 8 corporate bond positions. Because the decline in
market values of these securities is attributable to changes in interest rates
and not credit quality and because the Company has the ability and intent to
hold these investments until a recovery of fair value, which may be maturity,
the Company does not believe any of the unrealized losses represent other than
temporary impairment based on evaluations of available evidence as of November
30, 2005.

4.
Mortgage and notes receivable:

Mortgage
and notes receivable arose from real estate sales. The balances
are as
follows:

November
30,

2005

August
31,

(Unaudited)

2005

Mortgage
notes receivable on retail land sales

$

579

$

580

Mortgage
notes receivable on bulk land sales

56,976

56,976

Other
notes receivable

-

10

Total
mortgage and notes receivable

57,555

57,566

Less:
Deferred revenue

(45,230

)

(46,207

)

Discount on note to impute market interest

(2,594

)

(2,594

)

Current portion

(415

)

(2,370

)

Non-current
portion

$

9,316

$

6,395

5.
Inventories:

A
summary of the Company's inventories is shown below:

November
30,

2005

August
31,

(unaudited)

2005

Unharvested
citrus

$

7,223

$

8,176

Unharvested
sugarcane

2,250

5,691

Beef
cattle

4,572

5,024

Unharvested
sod

540

831

Plants
in greenhouses

948

1,156

Unharvested
vegetables

150

24

Total
inventories

$

15,683

$

20,902

The
Company's unharvested sugarcane and cattle are partially
uninsured.

Hurricane
Wilma, a category three hurricane swept through southwest Florida in October
2005. The hurricane caused extensive damage to the Company’s crops and
infrastructure in Collier and Hendry Counties. During August and September
of
2004 a series of three hurricanes struck a portion of the Company’s citrus
groves in Polk County Florida. The Company recognized losses resulting from
damages to inventory from the hurricanes as follows:

Three
months ended November 30,

(unaudited)

2005

2004

Unharvested
citrus

$

3,448

$

408

Unharvested
sugarcane

3,010

-

Unharvested
vegetables

147

-

Inventory
losses resulting from casualty

$

6,605

$

408

The
Company records its inventory at the lower of cost or net realizable value.
Due
to changing market conditions, the Company determined that its inventories
for
sugarcane, sod and plants in greenhouses had accumulated costs in excess of
their estimated net realizable value. The Company recorded losses of $834,
$85
and $346 for its sugarcane, sod and plants, respectively, during the three
months ended November 30, 2005 and included the adjustment as cost of sales
for
the quarter ended November 30, 2005. The cost basis of all inventories were
below their estimated net realizable values at November 30, 2004.

6.
Income taxes:

The
provision for income taxes for the three months ended November 30, 2005 and
2004 is summarized as follows:

Three
months ended November 30,

(unaudited)

2005

2004

Current:

Federal income tax

$

497

$

433

State income tax

53

46

550

479

Deferred:

Federal income tax

87

57

State income tax

9

6

96

63

Total
provision for income taxes

$

646

$

542

The
Internal Revenue Service is examining the Company’s tax returns for the years
ended August 31, 2004, 2003, 2002, 2001 and 2000, and Agri tax returns for
calendar years 2003, 2002, 2001 and 2000. The examinations began in October
2003. Any assessments resulting from the examinations will be currently due
and
payable. No assessments have been proposed to date. A revenue agent issued
a
report in May 2004, challenging Agri's tax-exempt status for the years examined;
however, the report did not quantify the adjustment or the assessment proposed.
Agri responded with a written report that disputes the facts, interpretation
of
law, and conclusions cited in the Agent’s report. Upon receipt of Agri’s
response in July 2004, the Agent proposed requesting a Technical Advice
Memorandum (TAM) from the national office to assist in settling the differences.
Currently, discussions are ongoing between the agents and Agri as to the
technical requirements and the appropriate scope for the proposed TAM filing.
The Company cannot predict what position the IRS will ultimately take with
respect to this matter. The Revenue Agent's report regarding Alico could be
issued within the current fiscal year. See also footnote 9 to the condensed
consolidated financial statements.

Since
January 1, 2004 Agri has been filing as a taxable entity. This change in
tax status is a direct result of changes in the Internal Revenue Code increasing
premium and other annual income levels. Due to these changes, Agri no
longer qualifies as a tax-exempt entity.

7.
Employee Benefit Plans:

Profit
Sharing Plan.
The
Company has a profit sharing plan covering substantially all employees. The
plan
was established under Internal Revenue Code section 401(k). Annual contributions
of $391 thousand and $434 thousand were made to the profit sharing plan for
the
years ended August 31, 2005 and 2004 respectively. These amounts were accrued
during the fourth quarter of fiscal 2005 and 2004.

Defined
Benefit Plan.
Additionally, the Company has a nonqualified defined benefit retirement plan
covering the officers and other key management personnel of the Company. Details
concerning the plan are as follows:

Three
months ended November 30,

Components
of net pension cost

2005

2004

Service cost, net of participant contributions

$

53

$

36

Interest cost

68

70

Net
pension cost for defined benefit plan

$

121

$

106

The
net
benefit obligation was computed using a discount rate of 6.25%. No employer
contributions were made to the plan during the three months ended November
30,
2005 and 2004.

8.
Indebtedness:

In
October 2005, Alico, Inc. entered into a Credit Facility with a commercial
lender. The Credit Facility provides the Company with a $175 million revolving
line of credit until August 1, 2010 to be used for general corporate purposes
including: (i) the normal operating needs of the Company and its operating
divisions, (ii) to refinance existing lines of credit and (iii) to finance
the
Ginn Receivable (as defined in the Loan Agreement). The terms also allow an
annual extension at the lender’s option.

Under
the
Credit Facility, revolving borrowings require quarterly interest payments
beginning January 1, 2006 at LIBOR plus a variable rate between 0.8% and 1.5%
depending on the Company’s debt ratio. The maximum available credit will be
reduced annually by approximately $14 million in August 2006, $31 million in
August 2007 and $31 million in August 2008, leaving a remaining balance of
$100
million from August 1, 2008 to the note’s maturity at August 1,
2010.

The
Credit Facility is partially collateralized by a mortgage on approximately
7,680
acres of agricultural property in Hendry County, Florida and any subsequent
real
estate acquisitions by the Company obtained with advances under the Credit
Facility.

Under
the
Credit Facility it is an event of default if the Company fails to make the
payments required of it or otherwise to fulfill the provisions and covenants
applicable to it. In the event of default, the Loan shall bear an increased
interest rate of 2% in addition to the then-current rate specified in the Note.
Alternatively, in the event of default the lender may, at its option, terminate
its revolving credit commitment and require immediate payment of the entire
unpaid principal amount of the Loan, accrued interest and all other obligations
immediately due and payable.

The
Credit Facility also contains numerous restrictive covenants including those
requiring the Company to maintain minimum levels of net worth, retain certain
Debt, Current and Fixed Charge Coverage Ratios, and set limitations on the
extension of loans or additional borrowings by the Company or any
subsidiary.

Outstanding
debts under the Company’s various loan agreements was as follows at November 30,
2005 and August 31, 2005:

c)
First mortgage on 7,680 acres of cane, citrus, pasture and improvements
in
Hendry County,
Florida with commercial lender. Monthly principal payments of $106
thousand plus

accrued
interest.

d)
First mortgage on a parcel of land in Polk County, Florida with
private
seller. Annual equal
payments of $55 thousand.

e)
Line of credit with commerical bank, refinanced in October,
2005

f)
Working capital loan with commerical bank, due on demand, refinanced
in
October, 2005

g)
Line of credit with commercial lender, refinanced in October,
2005

The
Libor
rate was 4.41% at November 30, 2005 and 3.87% at August 31, 2005.

Maturities
of the Company's debt at November 30, 2005 is as follows:

Due
within 1 year

$

3,312

Due
between 1 and 2 years

3,315

Due
between 2 and 3 years

1,318

Due
between 3 and 4 years

1,267

Due
between 4 and 5 years

41,387

Due
beyond five years

4,222

Total

$

54,821

Interest
costs expensed and capitalized to property, buildings and equipment was as
follows:

Three
months ended November 30,

(unaudited)

2005

2004

$

$

Interest
expense

991

508

Interest
capitalized

17

51

Total
interest costs

$

1,008

$

559

9.
Other non-current liability:

Alico
formed a wholly owned insurance subsidiary, Agri Insurance Company, Ltd.
(Bermuda) ("Agri") in June of 2000. Agri was formed in response to the lack
of
insurance availability, both in the traditional commercial insurance markets
and
governmental sponsored insurance programs, suitable to provide coverage for
the
increasing number and potential severity of agricultural events. Such events
include citrus canker, crop diseases, livestock related maladies and weather.
Alico’s goal included not only pre-funding its potential exposures related to
the aforementioned events, but also to attempt to attract new underwriting
capital if it is successful in profitably underwriting its own potential risks
as well as similar risks of its historic business partners.

Alico
capitalized Agri by contributing real estate located in Lee County Florida.
The
real estate was transferred at its historical cost basis. Agri received a
determination letter from the Internal Revenue Service (IRS) stating that Agri
was exempt from taxation provided that net premium levels, consisting only
of
premiums with third parties, were below an annual stated level ($350 thousand).
Third party premiums remained below the stated annual level. As the Lee County
real estate was sold, substantial gains were generated in Agri, creating
permanent book/tax differences.

Since
receiving the favorable IRS determination letter, certain transactions, entered
into by other taxpayers under the same IRS Code Section came under scrutiny
and
criticism by the news media. In reaction, Management has recorded a contingent
liability of $17.0 million at November 30, 2005 and August 31, 2005 for income
taxes in the event of an IRS challenge. Management’s decision has been
influenced by perceived changes in the regulatory environment. The Company
believes that it can successfully defend any such challenge. However, because
it
is probable that a challenge will be made and possible that it may be
successful, Management has provided for the contingency.

Since
January 1, 2004 Agri has been filing as a taxable entity. This change in
tax status is a direct result of changes in the Internal Revenue Code increasing
premium and other annual income levels. Due to these changes, Agri no
longer qualifies as a tax-exempt entity.

The
Internal Revenue Service is examining the Company’s tax returns for the years
ended August 31, 2004, 2003, 2002, 2001 and 2000, and Agri tax returns for
calendar years 2003, 2002, 2001 and 2000. The examinations began in October
2003.Any
assessments resulting from the examinations will be currently due and payable.
No assessments have been proposed to date. A revenue agent issued a report
in
May 2004, challenging Agri’s tax exempt status for the years examined; however,
the report did not quantify the adjustment or assessment proposed. Agri
responded with a written report that disputes the facts, interpretation of
law,
and conclusions cited in the Agent’s report. Upon receipt of Agri’s response in
July 2004, the Agent has proposed requesting a Technical Advice Memorandum
(TAM)
from the national office to assist in settling the differences. Currently,
discussions are ongoing between the agents and Agri as to the technical
requirements and the appropriate scope for the proposed TAM filing. The IRS
has
not proposed any adjustments to date for Alico. The Company cannot predict
what
position the IRS will ultimately take with respect to this matter. The Revenue
Agent’s report regarding Alico could be issued within the current fiscal
year.

10.
Dividends:

At
its
meeting on September 30, 2005 the Board of Directors declared a regular
quarterly dividend of $0.25 per share payable to stockholders of record as
of
December 31, 2005, with payment expected on or around January 15, 2006. At
its
Board of Directors meeting immediately following the annual shareholders meeting
held on January 6, 2006, the Board declared a regular quarterly dividend of
$0.25 per share payable to shareholders of record as of March 31, 2006 with
payment expected on or about April 15, 2006.

11.
Disclosures about reportable segments:

Alico
has
three reportable segments: citrus, sugarcane, and ranching. The commodities
produced by these segments are sold to wholesalers and processors who prepare
the products for consumption. The Company's operations are located in
Florida.

The
accounting policies of the segments are the same as those described in the
summary of significant accounting policies in the Company's annual report on
Form 10K filed for the fiscal year ended August 31, 2005. Alico, Inc. evaluates
performance based on profit or loss from operations before income taxes. Alico,
Inc.'s reportable segments are strategic business units that offer different
products. They are managed separately because each segment requires different
management techniques, knowledge and skills.

The
following table presents information for each of the Company's operating
segments as of and for the three months ended November 30, 2005:

Consolidated

Citrus

Sugarcane

Ranch

Other

Total

Revenue

$

1,208

$

1,986

$

2,224

$

11,873

$

17,291

Costs
and expenses

588

2,623

1,711

10,570

15,492

Segment
profit (loss)

620

(637

)

513

1,303

1,799

Depreciation
and amortization

627

497

413

242

1,779

Segment
assets

$

43,957

$

46,396

$

20,827

$

132,165

$

243,345

The
following table presents information for each of the Company's
operating
segments as of and
for the three months ended November 30, 2004:

Consolidated

Citrus

Sugarcane

Ranch

Other

Total

Revenue

$

879

$

2,453

$

2,135

$

3,435

$

8,902

Costs
and expenses

75

2,079

1,902

3,339

7,395

Segment
profit (loss)

804

374

233

96

1,507

Depreciation
and amortization

619

527

375

184

1,705

Segment
assets

$

54,215

$

50,743

$

22,002

$

115,003

$

241,963

12.
Stock Compensation Plans:

On
November 3, 1998, the Company adopted the Alico, Inc., Incentive Equity Plan
("the Incentive Plan") pursuant to which the Board of Directors of the Company
may grant options, stock appreciation rights, and/or restricted stock to certain
directors and employees. The Incentive Plan authorizes grants of shares or
options to purchase up to 650,000 shares of authorized but unissued common
stock. Stock options granted have a strike price and vesting schedules, which
are at the discretion of the Board of Directors

and
determined on the effective date of the grant. The strike price cannot be less
than 50% of the market price.

No
stock
options were issued during the three months ended November 30, 2005 and 2004.
Because no stock options were issued during the periods, there was no difference
in net income and proforma net income for the three months ended November 30,
2005 and 2004.

At
November 30, 2005 and August 31, 2005, there were 16,371 shares exercisable
and
292,844 shares available for grant.

13.
Other Comprehensive Income:

Other
comprehensive income, arising from market fluctuations in the Company's
securities portfolio, was as follows:

Three
months ended November 30,

(Unaudited)

2005

2004

Balance
of Other Comprehensive Income

at
beginning of period

$

2,195

$

1,529

Change
resulting from market flucuations, net of

tax,
and realized gains and losses

(2,409

)

1,798

Other
Comprehensive Income at end of period

$

(214

)

$

3,327

14.
Future Application of Accounting Standards:

In
May
2005 the FASB issued SFAS No. 154, “Accounting Changes and Error Corrections”.
SFAS 154 replaces APB No. 20, “Accounting Changes”, and SFAS No. 3, “Reporting
Changes in Interim Financial Statements”. SFAS No. 154 changes the accounting
for, and reporting of, a change in accounting principle. SFAS No. 154 requires
retrospective application to the prior period’s financial statements of
voluntary changes in accounting principle and changes required by new accounting
standards when the standard does not include specific transition provisions,
unless it is impractical to do so. SFAS No. 154 is effective for accounting
changes and corrections of errors in fiscal years beginning after December
15,
2005. Currently, the Company is not aware of any financial impact that the
adoption of this statement will have on its consolidated financial
statements.

15.
Casualty Losses:

Hurricane
Wilma, a category three hurricane, swept through southwest Florida in October
2005. The hurricane caused extensive damage to the Company’s crops and
infrastructure in

Collier
and Hendry Counties. Additionally, canker was confirmed in three groves totaling
420 acres. During August and September of 2004 a series of three hurricanes
struck a portion of the Company’s citrus groves in Polk County Florida. The
Company recognized losses resulting from damages caused by the hurricanes and
canker as follows:

November
30,

November
30,

2005

2004

(unaudited)

(unaudited)

Inventoried
costs

$

6,605

$

408

Basis
of property and equipment

plus
repairs to other assets

1,969

-

Insurance
proceeds received

(2,158

)

-

Insurance
proceeds receivable

(709

)

-

Total
casualty losses

$

5,707

$

408

16.
Subsequent Event:

The
Board
declared a regular quarterly dividend of $0.25 per share payable to shareholders
of record as of March 31, 2006 with payment expected on or about April 15,
2006.

ITEM
2.

Management's
Discussion and Analysis of Financial Condition and Results of
Operations.

Cautionary
Statement

____________________

Some
of
the statements in this document include statements about future expectations.
Statements that are not historical facts are "forward-looking statements" for
the purpose of the safe harbor provided by Section 21E of the Exchange Act
and
Section 27A of the Securities Act. These forward-looking statements, which
include references to one or more potential transactions, and strategic
alternatives under consideration, are predictive in nature or depend upon or
refer to future events or conditions, are subject to known, as well as, unknown
risks and uncertainties that may cause actual results to differ materially
from
Company expectations. There can be no assurance that any future transactions
will occur or be structured in the manner suggested or that any such transaction
will be completed. The Company undertakes no obligation to update publicly
any
forward-looking statements, whether as a result of future events, new
information or otherwise.

When
used
in this document, or in the documents incorporated by reference herein, the
words "anticipate", "believe", "estimate", "may", "intend", "expect", "should",
"could" and other words of similar meaning, are likely to address the Company's
growth strategy, financial results and/or product development programs. Actual
results, performance or achievements could differ materially from those
contemplated, expressed or implied by the forward-looking statements contained
herein. The considerations listed herein represent certain important factors
the
Company believes could cause such results to differ. These considerations are
not intended to represent a complete list of the general or specific risks
that
may affect the Company. It should be recognized that other risks, including
general economic factors and expansion strategies, may be significant, presently
or in the future, and the risks set forth herein may affect the Company to
a
greater or lesser extent than indicated.

LIQUIDITY
AND CAPITAL RESOURCES:

Working
capital decreased to $98.7
million
at November 30, 2005, from $111.2 million at August 31, 2005. As of November
30,
2005, the Company had cash and cash equivalents of $43.6 million compared to
$13.4 million at August 31, 2005. Marketable securities decreased to $34.9
million from $70.8 million during the same period. The ratio of current assets
to current liabilities increased to 8.53
to 1 at
November 30, 2005 from 7.24 to 1 at August 31, 2005. Total assets decreased
by
$4.4
million
to $243.3
million
at November 30, 2005, compared to $247.7 million at August 31,
2005.

Management
believes that the Company will be able to meet its working capital requirements
for the foreseeable future with internally generated funds. In
addition, the Company has credit commitments, which provide for revolving credit
of up to $175.0 million, of which $134.9 million was available for the Company's
general use at November 30, 2005 (see Note 8 to condensed consolidated financial
statements).

Hurricane
Wilma, a category three hurricane, swept through southwest Florida on October
24, 2005, causing extensive damage to the Company’s crops and infrastructure in
Collier and Hendry Counties. The Company recorded a casualty loss of $5.7
million of damages to crop inventories and infrastructure from the
hurricane.

Management
expects continued profitability from the Company’s agricultural operations in
fiscal 2006, but at reduced levels from fiscal year 2005, mostly due to losses
experienced during the hurricane.

Gross
profits from citrus operations are expected to remain profitable in fiscal
year
2006. Due to increased citrus canker discoveries, hurricane damage, and real
estate development in Florida, the Florida citrus crop is forecast to be much
smaller than the previous five year average. The smaller crop is expected to
cause the unit price of citrus products to increase.

However,
the damage sustained during the hurricane, consisting of the crop loss described
above, is expected to offset some, if not most, of the price
increase.

Management
expects sugarcane operations to post a loss in fiscal year 2006, due to the
damages experienced in the hurricane. The Company’s cattle operations in fiscal
year 2006 are expected to remain profitable but at lower levels than in fiscal
year 2005. To take advantage of favorable market conditions in fiscal year
2005,
the Company elected to sell a portion of its calves instead of delivering them
to feedlots for later sales. This election caused beef cattle inventory to
decrease at August 31, 2005 compared with the prior year and should ultimately
result in less units available for sale in fiscal year 2006 compared with fiscal
year 2005.

Cash
outlays for land, equipment, buildings, and other improvements totaled $12.5
million during the three months ended November 30, 2005, compared to $7.3
million during the three months ended November 30, 2004. In October 2005, the
Company through Alico-Agri, purchased 291 acres of lake-front property in Polk
County, Florida, for $9.2 million. In September 2004, the Company, through
Alico-Agri, purchased the assets of La Belle Plant World, Inc. The purchase
price was $4.9 million for the land, office building, greenhouses and associated
equipment.

In
accordance with guidelines established by the Company’s Board of Directors, the
Company restructured its investment portfolio during the first quarter of fiscal
2006, focusing on high quality fixed income securities with original maturities
of less than 12 months. As a result of staggered maturity dates, a greater
portion of the Company’s portfolio is classified as cash equivalents than under
previous investment policies.

The
sale
of a Lee County parcel closed in escrow during July 2005. The sales price was
$62.9 million consisting of $6.2 million in cash at closing with the balance
held as a 2.5% mortgage note receivable of $56.7 million payable in four equal
principal installments together with accrued interest annually for the next
four
years after a final development order for the property is issued. The final
development order is expected to be issued soon. However, the first principal
and interest installment under the contract will not be due until 12 months
after the order is issued.

Another
sale in Lee County is expected to close in fiscal year 2007. This contract
is
for a gross sales price of $75.5 million, consisting of $7.6 million in cash
at
closing with the balance payable as a 2.5% mortgage note receivable of $67.9
million. The agreement is subject to various contingencies and there is no
assurance that it will close or that it will close within the time period
stated.

The
Company, through Agri, supplied catastrophic business interruption coverage
for
Tri-County Grove, LLC, a subsidiary of Atlantic Blue Trust, Inc., the holder
of
approximately 48% of the Company’s common stock. Total coverage under the policy
was $2.7 million. This represents the only underwriting exposure at November
30,
2005. Citrus canker was discovered in a Tri-County Grove LLC citrus grove in
2005, requiring the total destruction of the majority of their citrus trees.
Agri accrued a loss reserve in fiscal year 2005 equal to the total potential
exposure of Agri under the policy for this claim of $1.4 million.

In
November 2005, the Company sold approximately 280 acres of citrus grove land
located south of Labelle, Florida in Hendry County for $5.6 million cash in
escrow. The Company will retain operating rights to the grove until residential
development begins. The Company is exploring the possibility of a like-kind
exchange regarding this transaction.

The
Company paid a regular quarterly dividend of $0.25 per share to shareholders
of
record as of September 30, 2005 on October 15, 2005. Additionally, at its Board
of Directors meeting held on September 30, 2005, the Board declared a quarterly
dividend of $0.25 per share payable to stockholders of record as of December
31,
2005, with payment expected on or about January 15, 2006. At its Board of
Directors meeting immediately following the annual shareholders meeting on
January 6, 2006, the Board declared a regular quarterly dividend of $0.25 per
share payable to shareholders of record as of March 31, with payment expected
on
or about April 15, 2006.

The
Internal Revenue Service is examining the Company’s tax returns for the years
ended August 31, 2004, 2003, 2002, 2001 and 2000, and Agri tax returns for
calendar years 2003, 2002, 2001 and 2000. The examinations began in October
2003. Any assessments resulting from the examinations will be currently due
and
payable. No assessments have been proposed to date. A revenue agent issued
a
report in May 2004 that challenged Agri’s tax exempt status for the years
examined; however, the report did not quantify the adjustment or assessment
proposed. Agri responded with a written report that disputes the facts,
interpretation of law, and conclusions cited in the Agent’s report. Upon receipt
of Agri’s response in July 2004, the Agent has proposed requesting a Technical
Advice Memorandum (TAM) from the national office to assist in settling the
differences. Currently, discussions are ongoing between the agents and Agri
as
to the technical requirements and the appropriate scope for the proposed TAM
filing. The IRS has not proposed any adjustments to date for Alico. The Company
cannot predict what position the IRS will ultimately take with respect to this
matter. The Revenue Agent’s report regarding Alico could be issued within the
current fiscal year.

RESULTS
OF OPERATIONS:

The
basic
business of the Company is agriculture, which is of a seasonal nature and is
subject to the influence of natural phenomena and wide price fluctuations.
The
results of operations for the stated periods are not necessarily indicative
of
results to be expected for the full year.

Net
income for the quarter ended November 30, 2005 was $1.2million
compared to $1.0 million for the quarter ended November 30, 2004. Increased
net
profit
from
bulk real estate sales ($4.4 million compared with $0.0 million for the three
months ended November 30, 2005 and November 30, 2004, respectively) and interest
and investment income ($5.0 million for the three months ended November 30,
2005
compared with $1.3 million for the three months ended November 30, 2004) offset
the increased losses from casualties ($5.7 million for the three months ended
November 30, 2005 compared with $0.4 million for the three months ended November
30, 2004) and losses from operations, excluding casualty losses ($1.0 million
loss, compared with $1.2 million income for the three months ended November
30,
2005 and 2004, respectively).

Loss
from
operations was $6.7 million for the quarter ended November 30, 2005 compared
to
income of $0.8 million for the quarter ended November 30, 2004. The decrease
was
primarily due to increased casualty losses sustained ($5.7 million compared
with
$0.4 million for the three months ended November 30, 2005 and 2004,
respectively). Earnings from rock and sand royalties decreased to $0.2 million
for the three months ended November 30, 2005 compared with $0.9 million during
the same period in the prior year. The property where the primary rock mine
was
located was sold in July 2005. The Company is currently exploring alternative
sites for a rock mine. Additionally, earnings from agricultural operations
decreased by $1.3 million to $0.2 million for the three months ended November
30, 2005 compared with $1.5 million for the three months ended November 30,
2004. The factors causing the decline in agricultural operations are discussed
in detail below.

Citrus

The
Citrus division recorded a profit of $0.6 million for the first quarter of
fiscal 2006, compared with $0.8 million during the first quarter of fiscal
2005.
The Florida orange crop for the 2005-06 season is forecast at 162 million boxes
compared with an orange crop of 150 million boxes in the 2004-05 season. The
five year average Florida orange crop from the 1999-00 season through the
2003-04 season is 226 million boxes. Hurricanes, citrus canker finds and
increased real estate development in the central and southern portions of
Florida where the majority of citrus is produced have combined to reduce the
supply of citrus for the past two years, resulting in price increases for citrus
products across the industry.

Hurricane
Wilma, a category three hurricane, swept through southwest Florida on October
24, 2005, causing extensive damage to the Company’s crops and infrastructure in
Collier and Hendry Counties. The Company estimates that approximately 28% of
its
expected citrus crop for fiscal year 2006 was destroyed as a direct result
of
the hurricane.

Citrus
canker is a highly contagious bacterial disease of citrus that causes premature
leaf and fruit drop. Citrus canker causes no threat to humans, animals or plant
life other than citrus. In an effort to eradicate the disease, Florida law
required infected and exposed trees within 1900 feet of the canker find to
be
removed and destroyed. Since May 25, 2005, the Company has destroyed or marked
for destruction 1,393
acres or
12%
of its
total citrus groves due to canker discoveries. Effective January 10, 2006,
the
USDA announced that trees within 1900 feet of a canker find would no longer
be
required to be destroyed, but that trees testing positive for canker would
continue to be destroyed. Further guidelines are being developed.

Due
to
the damages caused by hurricane Wilma and the canker discoveries, the Company
estimates its total citrus harvest for fiscal year 2006 at 3.2 million boxes,
compared with 4.0 million for fiscal year 2005 and 4.4 million for fiscal year
2004.

Sugarcane
and Sod

Sugarcane
and sod generated a loss of $0.6 million for the three months ended November
30,
2005 compared with earnings of $0.4 million for the three months ended November
30, 2004. Fertilizer is the largest component of production costs for the
Company’s sugarcane crop. Due to price increases in the cost of fuel used to
produce fertilizer, fertilizer prices increased 23% over their prior year
levels. The increased price of fertilizer caused the Company’s production costs
per ton to rise above the expected net realizable value. As a result, the
Company adjusted its inventoried sugarcane crop by $834 thousand in the first
quarter of fiscal 2005, charging it to cost of sales. This
adjustment,
caused
by the price increase in fertilizer described above, was the primary cause
of
the loss.

Ranching

Ranch
earnings increased during the three months ended November 30, 2005 when compared
with the same period a year ago ($0.5 million compared to $0.2 million for
the
quarters ended November 30, 2005 and 2004, respectively). Prices for beef
products have improved during the current year compared with the prior year
($0.82 per pound average received on all cattle sold for the first quarter
of
fiscal year 2006, compared with $0.76 per pound average for the first quarter
of
fiscal 2005). The price increase is the primary cause for the increased profits
in the current year.

Other
Agricultural Operations

On
October 24, 2005 Hurricane Wilma, a category three hurricane, swept through
southwest Florida causing extensive damage to Alico Plant World greenhouses.
As
a result of the damage, normal business operations were disrupted resulting
in
lower sales and increased costs. This along with lower pricing required the
Company to record a loss of $342 to write down inventory to net realized
value.

General
Corporate

In
November 2005, the Company sold approximately 280 acres of citrus grove land
located south of Labelle, Florida in Hendry County for $5.6 million cash in
escrow. The Company will retain operating rights to the grove until residential
development begins. The Company is exploring the possibility of a like-kind
exchange regarding this transaction.

In
October 2005, the Company through Alico-Agri, purchased approximately 291 acres
in Polk County, Florida on October 11, 2005 for $9.2 million. The property
contains 2,100 feet of road frontage on U.S. 27 and 2,600 feet of road frontage
on County road 640. The property also includes approximately 2,640 feet of
lakefront along Crooked Lake, a 6,000 acre lake. The Company identified the
property as an exchange property under section 1031 of the Internal Revenue
Code
and intends to defer tax on $9.2 million of proceeds from the recently announced
Ginn sale in connection with the acquisition.

The
sale
of a Lee County parcel closed in escrow during July 2005. The sales price was
$62.9 million consisting of $6.2 million in cash at closing with the balance
held as a 2.5% mortgage note receivable of $56.7 million payable in four equal
principal installments together with accrued interest annually for the next
four
years after a final development order for the property is issued. The issuance
of the final development order is in process and the first principal and
interest installment under the contract will not be due until 12 months after
the order is issued.

An
agreement to sell the remaining property in Lee County is expected to close
in
fiscal year 2007. This contract is for a gross sales price of $75.5 million,
consisting of $7.6 million in cash at closing with the balance payable as a
2.5%
mortgage note receivable of $67.9 million. The Company is exploring its options
under the contract, including the possibility of a like-kind exchange. The
agreement is subject to various contingencies and there is no assurance that
it
will close or that it will close within the time period stated.

Agri-Insurance,
Co. Ltd., a wholly owned subsidiary of Alico, Inc., wrote an insurance policy
for Tri-County Grove, LLC, a subsidiary of Atlantic Blue Trust, Inc., the holder
of approximately 48% of the Company’s common stock in 2004. The coverage term
was from August 2004 to July 2005. Total coverage under the policy was $2.7
million and the Company charged a premium of $45 thousand. Tri-County LLC
discovered citrus canker in their groves in 2005, requiring the total
destruction of the majority of their citrus trees. Agri accrued a loss reserve
in fiscal year 2005 equal to the total potential exposure under the policy
for
this claim of $1.4 million.

Premiums
for coverages quoted are set by independent actuaries and underwriters hired
by
Agri based on underwriting considerations established by them. Premiums vary
depending upon the size of the property, its age and revenue-producing history,
as well as the proximity of the insured property to known disease-prone areas
or
other insured hazards.

In
September 2004, the Company, through Alico-Agri, purchased the assets of La
Belle Plant World, Inc., a wholesale grower and shipper of commercial vegetable
transplants to commercial farmers. The purchase price was $4.9 million for
the
land, office building, greenhouses and associated equipment. Alico Plant World,
LLC ("Plant World") was set up as a wholly owned subsidiary of Alico-Agri,
Ltd.

Plant
World was purchased in order to diversify Alico’s agricultural operations and to
take advantage of Alico’s existing relationships with the farming community. Due
to Plant World's limited operating history, it would be difficult to speculate
regarding Plant World’s impact on the Company's financial position, results of
operations and liquidity in future periods.

Off
Balance Sheet Arrangements

______________________________

The
Company, through Agri, supplied catastrophic business interruption coverage
for
Tri-County Grove, LLC, a subsidiary of Atlantic Blue Trust, Inc., the holder
of
approximately 48% of the Company’s common stock. Total coverage under the policy
was $2.7 million. This represents the only underwriting exposure at November
30,
2005. Citrus canker was discovered in a Tri-County Grove LLC citrus grove in
2005, requiring the total destruction of the majority of their citrus trees.
Agri accrued a loss reserve in fiscal year 2005 equal to the total potential
exposure under the policy for this claim of $1.4 million.

Premiums
for coverages quoted are set by independent actuaries and underwriters hired
by
Agri based on underwriting considerations established by them. Premiums vary
depending upon the size of the property, its age and revenue-producing history,
as well as the proximity of the insured property to known disease-prone areas
or
other insured hazards.

Disclosure
of Contractual Obligations

_____________________________________

There
have been no significant changes in the contractual obligations of the Company
since the disclosure of this item on the Company’s last annual report on Form
10-K filed for the fiscal year ended August 31, 2005.

Critical
Accounting Policies and Estimates

__________________________________________

The
preparation of the Company's financial statements and related disclosures in
conformity with accounting principles generally accepted in the United States
of
America requires Management to make estimates and judgments that affect the
reported amounts of assets and liabilities, revenues and expenses, and related
disclosures of contingent assets and liabilities. On an on-going basis,
Management evaluates the estimates and assumptions based upon historical
experience and various other factors and circumstances. Management believes
that
the estimates and assumptions are reasonable in the circumstances; however,
actual results may vary from these estimates and assumptions under different
future circumstances. The critical accounting policies that affect the more
significant judgments and estimates used in the preparation of our consolidated
financial statements are discussed below.

Alico
records inventory at the lower of cost or market. Management regularly assesses
estimated inventory valuations based on current and forecasted usage of the
related commodity and any other relevant factors that affect the net realizable
value.

Based
on
fruit buyers' and processors' advances to growers, stated cash and futures
markets, together with combined experience in the industry, Management reviews
the reasonableness of the citrus revenue accrual. Adjustments are made
throughout the year to these estimates as relevant information regarding the
citrus market becomes available. Fluctuation in the market prices for citrus
fruit has caused the Company to recognize additional revenue from the prior
year's crop totaling $418 thousand during fiscal 2006 and $31 thousand in fiscal
2005.

In
accordance with Statement of Position 85-3 "Accounting by Agricultural Producers
and Agricultural Cooperatives", the cost of growing crops (citrus and sugarcane)
are capitalized into inventory until the time of harvest. Once a given crop
is
harvested, the related inventoried costs are recognized as cost of sales to
provide an appropriate matching of costs incurred with the related revenue
earned. The inventoried cost of each crop is then compared with the estimated
net realizable value (NRV) of the crop and any costs in excess of the NRV are
immediately recognized as cost of sales.

Alico,
Inc. insures its citrus trees against potential losses resulting from crop
diseases, citrus canker and weather. In an effort to eradicate citrus canker,
Florida law requires infected and exposed trees within 1900 feet of the canker
find to be removed and destroyed. In the process of estimating insurance claims,
the Company must estimate the number of trees that fall within the 1900 foot
radius.

Citrus
canker is a highly contagious bacterial disease of citrus that causes premature
leaf and fruit drop. Citrus canker causes no threat to humans, animals or plant
life other than citrus. In an effort to eradicate the disease, Florida law
required infected and exposed trees within 1900 feet of the canker find to
be
removed and destroyed. Since May 25, 2005, the Company has destroyed or marked
for destruction 1,393
acres or
12%
of its
total citrus groves due to canker discoveries. Effective January 10, 2006,
the
USDA announced that trees within 1900 feet of a canker find would no longer
be
required to be destroyed, but that trees testing positive for canker would
continue to be destroyed. Further guidelines are being developed.

The
Company has estimated its losses due to citrus canker by applying the 1900
foot
rule to canker finds through November 30, 2005. The announcement by the USDA
will change the manner in which the Company treats losses resulting from citrus
canker finds beginning with the second quarter of fiscal year 2006.

Hurricane
Wilma, a category three hurricane, swept through southwest Florida on October
24, 2005, causing extensive damage to the Company’s crops and infrastructure in
Collier and Hendry Counties. In calculating the estimated amount of loss
resulting from the hurricane, Management estimated the amount of crop loss
and
property damage. The estimates were based on information obtained from
observation, provided by insurance claims adjusters, and discussions with other
industry experts. These estimates will be revised as actual losses are
confirmed.

In
June
of 2000, Alico formed a wholly owned insurance subsidiary, Agri Insurance
Company, Ltd. (Bermuda) ("Agri"), in response to the lack of available
insurance, both in the traditional commercial insurance markets and governmental
sponsored insurance programs, suitable to provide coverages for the increasing
number and potential severity of agricultural related events. Such events
typically include citrus canker, crop diseases, livestock related maladies
and
weather. By forming Agri, Alico hoped to prefund its potential exposures related
to the referenced events, and also attract new underwriting capital to the
extent that Agri is successful in profitably underwriting both its own
potential risks, and those of its historic business partners.

Alico
capitalized Agri by contributing real estate located in Lee County, Florida.
The
real estate was transferred at its historical cost basis. Agri received a
determination letter from the Internal Revenue Service (IRS) stating that Agri
was exempt from taxation provided that net premium levels, consisting only
of
premiums with third parties, were below an annual stated level ($350 thousand).
Third party premiums have remained below the stated annual level. As the Lee
county real estate was sold, substantial gains were generated in Agri, creating
permanent book and tax differences.

Since
receiving the favorable IRS determination letter, certain transactions, entered
into by other taxpayers under the same IRS Code Section came under scrutiny
and
criticism by the news media. In response, and to provide for the possibility
of
an IRS challenge, Management has recorded a contingent liability of $17.0
million for income taxes in the event of an IRS challenge. Management’s decision
was in part influenced by perceived changes in the regulatory environment.
The
Company believes that it can successfully defend any such challenge. However,
because a challenge has been made and there is a possibility that the challenge
may be successful, Management has provided for the contingency.

In
October 2003, the Internal Revenue Service began an examination of the Company
tax returns for the years ended August 31, 2004, 2003, 2002, 2001 and 2000,
and
Agri tax returns for calendar years 2003, 2002, 2001 and 2000. Any assessments
resulting from the examinations will be currently due and payable. No
assessments have been proposed to date. A revenue agent issued a report in
May
2004, challenging Agri's tax-exempt status for the years examined; however,
the
report did not quantify the adjustment or the assessment proposed. Agri
responded with a written report that disputes the facts, interpretation of
law,
and conclusions cited in the Agent’s report. Upon receipt of Agri’s response in
July 2004, the Agent proposed requesting a Technical Advice Memorandum (TAM)
from the national office to assist in settling the differences. Currently,
discussions are ongoing between the agents and Agri as to the technical
requirements and the appropriate scope for this proposed TAM filing. The Company
cannot predict what position the IRS will ultimately take with respect to this
matter. The Revenue Agent's report regarding Alico could be issued within the
current fiscal year.

ITEM
3. Quantitative and Qualitative Disclosures about Market
Risk

There
are
no changes since the Company’s disclosure of this item on its last annual report
on Form 10-K filed for the fiscal year ended August 31, 2005.

ITEM
4. Controls and Procedures

Evaluation
of disclosure controls and procedures

The
Company maintains disclosure controls and procedures that are designed to ensure
that information required to be disclosed in the Company's reports under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), is recorded,
processed, summarized and reported within the time periods
specified

in
the
SEC's rules and forms and that such information is accumulated and communicated
to management, including the Company's Chief Executive Officer and Chief
Financial Officer, as appropriate, to allow timely decisions regarding required
disclosure. The Company periodically reviews the design and effectiveness of
its
disclosure controls and internal control over financial reporting. The Company
makes modifications to improve the design and effectiveness of its disclosure
controls and internal control structure, and may take other corrective action,
if its reviews identify a need for such modifications or actions.

A
control
system, no matter how well conceived and operated, can provide only reasonable,
not absolute, assurance that the objectives of the control system are met.
Because of the inherent limitations in all control systems, no evaluation of
controls can provide absolute assurance that all control issues and instances
of
fraud, if any, within the Company have been detected. These inherent limitations
include the realities that judgments in decision-making can be faulty and that
breakdowns can occur because of simple error or mistake. Additionally, controls
can be circumvented by the individual acts of some

persons,
by collusion of two or more people, or by management override of the control.
The design of any system of controls also is based in part upon certain
assumptions about the likelihood of future events, and there can be no assurance
that any design will succeed in achieving its stated goals under all
potential

future
conditions. Over time, control may become inadequate because of changes in
conditions or the degree of compliance with the policies or procedures may
deteriorate. Because of the inherent limitations in a cost-effective control
system, misstatements due to error or fraud may occur and not be
detected.

In
connection with the preparation of the Company's Annual Report on Form 10-K,
as
of August 31, 2005, an evaluation was performed under the supervision and with
the participation of the Company's management, including the Chief Executive
Officer and Chief Financial Officer, of the effectiveness of the design and
operation of the Company's disclosure controls and procedures (as defined in
Rule 13a-15(e) and 15d-15(e) under the Exchange Act). The Company concluded
that
control deficiencies in its internal control over financial reporting as of
August 31, 2005 constituted a material weakness within the meaning of the Public
Company Accounting Oversight Board's Auditing Standard No. 2, An Audit of
Internal Control Over Financial Reporting Performed in Conjunction with an
Audit
of Financial Statements.

The
material weakness identified by the Company was disclosed in its Annual Report
on Form 10-K, which was filed with the SEC on November 23, 2005. Based on that
evaluation, the Chief Executive Officer and Chief Financial Officer have
concluded that, as of November 30, 2005, the Company's

disclosure
controls and procedures may not be effective, for the reasons described above
(relating to the previously-identified material weakness in internal control
over financial reporting).

Changes
in internal control over financial reporting

Management,
with oversight from the Audit Committee of the Board of Directors, has been
addressing the material weakness disclosed in its Form 10-K and is committed
to
effectively remediating known weaknesses as expeditiously as possible. Although
the Company's remediation efforts are well underway, control weaknesses will
not
be considered remediated

until
new
internal controls over financial reporting are implemented and operational
for a
period of time and are tested, and management and its independent registered
public accounting firm conclude that these controls are operating effectively.
Management has therefore concluded that there have been no changes made in
the
Company's internal controls over financial reporting in connection with its
first quarter evaluation that would materially affect, or are reasonably likely
to materially affect, its internal control over financial
reporting.

The
current status of the Company's remediation efforts to address the material
weakness in internal control over financial reporting identified in its Annual
report for the year ended August 31, 2005 is as follows:

Management
assessed the effectiveness of the Company’s internal control over financial
reporting as of August 31, 2005. In making the assessment, Management used
the
criteria set forth by the Committee of Sponsoring Organizations of the Treadway
Commission (“COSO”) in Internal Control - Integrated Framework. Based upon this
assessment and as more fully explained below, management identified a material
weakness in Alico’s internal control over financial reporting as of August 31,
2005. A material weakness is a control deficiency, or combination of control
deficiencies, that results in more than a remote likelihood that a material
misstatement of the annual or interim financial statements will not be prevented
or detected. Management identified the following material weakness as of August
31, 2005:

This
material weakness resulted from a lack of qualified financial reporting
personnel with sufficient depth, skills, and experience to apply generally
accepted accounting principles to the Company's transactions and to prepare
financial statements that comply with generally accepted accounting principles.
Specifically, monitoring controls to ensure journal entries are posted
accurately and in a timely fashion were ineffective during the fiscal 2005
closing process. This resulted in a missed elimination entry to inter-company
accounts and an incorrect entry to deferred income taxes and other comprehensive
income. Although the missed or incorrect entries were not prevented or detected
by the Company's existing system of internal controls, the entries were
identified by the Company’s independent auditors, and were corrected and
properly reflected in the fiscal 2005 year end financial
statements.

Although
the Company does not believe that the material weakness identified impacted
any
previously filed financial statements, the existence of a material weakness
or
weaknesses is an indication that there is more than a remote likelihood that
a
material misstatement of the Company's financial statements will not be
prevented or detected in a future period.

Subsequent
to the year ended August 31, 2005, the Company added a certified public
accountant, a qualified and experienced financial reporting manager in the
Accounting Department to ensure that it has sufficient depth, skills, and
experience within the department to prepare its financial statements and
disclosures in accordance with generally accepted accounting principles.
Management will continue to evaluate the progress and abilities of accounting
personnel in order to assess whether the weakness has been effectively
remediated. The Company also plans to enhance and strengthen its written
accounting and reporting policies pertaining to the elimination of inter-company
balances and will train employees with respect to the new policies.
Additionally, the Company has purchased accounting software specifically
designed to handle consolidating entries, schedules and issues. While the
remediation measures are expected to improve the design and effectiveness of
the
Company's internal control over financial reporting, the controls have not
yet
operated effectively for a sufficient period of time to demonstrate operating
effectiveness. Management is committed to correcting this material
weakness.

As
a
result of the material weakness identified above, we have concluded that as
of
August 31, 2005, the Company did not maintain effective internal control over
financial reporting.

FORM
10-Q

PART
II. OTHER INFORMATION

ITEM
1.
has been omitted as there are no items to report during this interim
period.

ITEM
2.
Unregistered sales of Equity Securities

On
November 30, 2005 pursuant to the Director Compensation Plan approved by the
Company’s shareholders on June 10, 2005, the Company issued 6,447 shares of its
common stock as restricted shares privately placed in reliance on rule 144
to
the independent directors as follows:

Evelyn
D’An
725
shares

Phillip
S.
Dingle
896
shares

Gregory
T. Mutz
2,809
shares

Charles
L.
Palmer 923
shares

Gordon
Walker
1,094
shares

The
Directors received the shares in lieu of cash Director fees as provided under
the Director Compensation Plan. The Company did not receive any cash for these
transactions.

The
following table provides information relating to purchases by Alico, Inc. of
Alico, Inc. common shares on the open market pursuant to the Director
Compensation Plan approved by the Company’s shareholders on June 10, 2005 for
the first quarter of fiscal 2006:

Date

Total
Number of Shares Purchased

Average
price paid per share

Total
Number of Shares Purchased as Part of Publicly Announced Plans
or
Programs

Approximate
Dollar Value of Shares that May Yet Be Purchased Under Publicly
Announced
Plans or Programs

11/28/2005

10,000

$

45.98

10,000

$

919,600

ITEM
4.
Submission of matters to a vote of security holders.

On
January 6, 2006 the Company held its annual meeting of stockholders. At the
meeting, the Company’s stockholders voted to elect the following persons to the
Company’s Board of Directors, each of whom was named as a director nominee in
the Company’s proxy statement dated as of December 8, 2005: John R.
Alexander, Robert E. Lee Caswell, Evelyn D’An, Phillip S. Dingle, Gregory T.
Mutz, Charles Palmer, Baxter G. Troutman and Gordon Walker. The results of
the votes were as follows:

Director
elections

For

Withheld

Abstentions

Broker
non votes

John
R. Alexander

6,625,570

372,597

0

0

Robert
E. Lee Caswell

6,667,511

330,656

0

0

Evelyn
D'an

6,658,721

339,446

0

0

Phillip
S. Dingle

6,662,561

335,606

0

0

Gregory
T. Mutz

6,634,356

363,811

0

0

Charles
Palmer

6,673,833

324,334

0

0

Baxter
Troutman

6,639,875

358,292

0

0

Gordon
Walker

6,659,051

339,116

0

0

ITEM
5
has been omitted as there are no items to report during this interim
period.

ITEM
6.
Exhibits

Exhibit
3.1 Restated Certificate of Incorporation, dated February 17, 1971, as amended
(incorporated by reference to the Company’s Registration Statement on form S-1,
File No. 2-43156).

Exhibit
3.2 Bylaws of the Company, as amended (incorporated by reference to the
Company’s Registration Statement on form S-8, File No. 333-130575).

Exhibit
10 Loan Agreement, dated October 11, 2005 (incorporated by reference to Exhibit
10.01 of the Company’s Current Report on Form 8-K filed October 17,
2005).

Exhibit
11 Computation of Earnings per share November 30, 2005.

Exhibit
31.1 Rule 13a-14(a) certification.

Exhibit
31.2 Rule 13a-14(a) certification.

Exhibit
32.1 Section 1350 certification.

Exhibit
32.2 Section 1350 certification.

SIGNATURES

Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant
has
duly caused this report to be signed on its behalf by the undersigned thereunto
duly authorized.